Plantronics 2002 Annual Report Download - page 29

period. If market conditions were to decline, Plantronics may take action to increase
promotional programs resulting in incremental reductions in revenue at the time the
incentive is offered based on our estimate of inventory in the channel that is subject to s u c h
pricing actions.
Accounts Receivable. We perform ongoing credit evaluations of our customers’ financial
condition and generally require no collateral from our customers. Plantronics maintains
allowances for doubtful accounts for e s t i mated losses resulting from the inability of its
customers to make required payments. If the financial condition of our customers should
deteriorate, resulting in an impairment of their ability to make payments, additional
allowances may be required.
I n v e n t o r y. Plantronics maintains reserves for estimated excess and obsolete inventory
based on projected future shipments using historical selling rates, and taking into
account market conditions, inventory on-hand, purchase commitments, product
development plans and life expectancy, and competitive factors. If markets for
Plantronics’ products and corresponding demand were to decline, then additional
reserves may be deemed n e c e s s a r y.
Plantronics provides for the estimated cost of warranties at the time revenue is recognized.
While Plantronics engages in extensive product quality programs and processes, and is ISO
9000 certified, our warranty obligation is affected by product failure rates and m a t e r i a l
usage levels. Should actual failure rates and material usage differ from our estimates,
revisions to the warranty obligation may be required.
Goodwill and Intangibles. Our business acquisitions typically result in goodwill and
intangible assets, which affect the amount of future amortization expense and possible
impairment charges that we may incur. T he determination of the value of goodwill and
intangible assets, as well as the useful life of amortizable intangible assets, requires
management to make estimates and assumptions that affect our financial statements.
For example, we perform an annual impairment review of goodwill based on the fair
value of the reporting unit to which it relates. Should the actual or expected revenue of
a reporting unit significantly decline, we may be required to record an impairment charg e .
Deferred Ta x e s . Plantronics records its deferred tax assets at the amounts e s t i m a t e d
to be realizable. While Plantronics has considered future taxable income and ongoing
prudent and feasible tax planning strategies in assessing the value of the corresponding
assets, in the event Plantronics were to determine that it would not be able to realize all or
part of its net deferred tax assets in the future, then an adjustment would be required.
A N N U A L R E S U LT S O F O P E R AT I O N S
N et Sales. Net sales in fiscal 2002 decreased 20.4% to $311.2 million compared to
$390.7 million in fiscal 2001, which in turn increased 26.4% compared to fiscal 2000 net
sales of $309.1 million. Our fiscal years ended March 31, 2002 and 2001 both contained
52 weeks versus 53 weeks for fiscal year 2000.
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